Ford Motor Co. and Volkswagen Group will move forward with discussions to jointly manufacture a range of light commercial vehicles, Volkswagen said Friday during a news conference in Germany.

Talks on a broader partnership continue with an aim to firm up plans by year's end, VW CEO Herbert Diess said.

"We're looking into common platforms that we have,” he said, adding: "Ford is very strong in the U.S.; we are strong in other markets."

The opportunity delivers lower costs and bigger profits to both companies, which "will remain competitors" in other arenas, the German company said. Diess emphasized that a merger with Ford was "never" contemplated as part of the discussions.

Ford and Volkswagen have been engaging in a wide-ranging partnership with game-changing consequences for the auto industry.

Ford spokeswoman Jennifer Flake responded Friday morning, "Our MOU (Memorandum of Understanding) with VW covers conversations across a number of areas. It is premature to share additional details at this time."

The carmakers have not ruled out joining forces to potentially develop electric vehicles and driverless technology.

Volkswagen officials said Friday they plan to invest 44 billion euro ($50 billion) in "e-mobility, autonomous driving, new mobility services and digitalization" over the next five years.

The company, headquartered in Wolfsburg, Germany, is the world’s No. 1 automaker by sales.

Collaboration between the two companies is viewed as a path to significant savings on research and development while at the same time delivering big revenue.

Ford officials said this week during a driverless vehicle media presentation in Miami that the company predicts incredible return on investment with AVs (autonomous vehicles) and a higher profit margin than exists today in the car industry.

The opportunity is "massive," said Sherif Marakby, CEO of Ford Autonomous Vehicles LLC, who estimated the market value to exceed $300 billion per year for driverless delivery of people and products.

Ford CEO Jim Hackett has said technology companies see trillions of dollars at stake.

Working together, the iconic German and American companies could dominate the industry.

VW is strong in South America and Europe and Asia, but lacks vehicles in the high-profit full-size pickup category. Ford is strong in the U.S. with its sales of lucrative F-Series pickups and SUVs.

Ford makes nearly 40 percent of all full-size pickups sold in the U.S. And VW sells nearly 15 percent of the vehicles purchased in China, the largest auto market in the world.

On Friday, news leaked early out of the VW supervisory board meeting that the CEO of Volkswagen would assume leadership of China operations in early 2019. Such an unexpected pivot in a highly valuable market signaled concern among analysts.

“From what I have heard from on the ground in China, things apparently feel much worse in China than the government press is letting on, and hence the global press is realizing. Since China is huge for VW, if China is troubled, they are worried," said Jon Gabrielsen, a market economist who advises automakers and auto suppliers..

“This would also be consistent with the struggles Ford is having in China and that GM may have as well. Just the abrupt change from 10 years of 15 percent annual auto sales growth literally every year, to becoming flat to slightly declining for now, is a massive shock to the market.”

Collaboration with VW is familiar ground for Ford, Gabrielsen said.

“What VW and Ford appear to be planning for commercial vehicles is joint design, development and manufacturing to then be separately branded, marketed and sold by each of them individual companies," he said. "This would be analogous to past joint car production for North America such as Mazda Flat Rock Michigan that produced Ford and Mazda cars, Mitsubishi Bloomington Normal Illinois that produced Mitsubishi and Chrysler cars, and CAMI in Ontario that produced Suzuki and Chevrolet cars.”

Bundle forces

Ford and VW started talking in June about cooperation on light commercial vehicles, reflecting the pressure from new players and scope of the transition in mobility.

On the Volkswagen website, now listed under "Partnerships are a key success factor for shaping the future," is the following statement about Ford:

"The talks with Ford about an industrial cooperation announced earlier are progressing positively so far. The two companies complement each other very well in terms of both products and regions. The joint development and manufacture of a range of light commercial vehicles is at the core of the envisaged cooperation. Volkswagen expects significant synergy effects from the potential to lower costs or increase performance via scales. Ford and Volkswagen will nevertheless remain competitors, as the proposed cooperation does in no way concern commercial, marketing or pricing strategies. Additional fields of cooperation outside the light commercial vehicle segment with the potential for expanding collaboration have also been identified.”